tv Whatd You Miss Bloomberg February 13, 2020 4:00pm-5:00pm EST
international economic conditions, the manufacturing cycle. the same old story of the week is weak.dex the entire group of the s&p 500 has the standout startek, health architectutilities -- are tech, health care, and utilities. when i look at volume, it is lower than the 20 day average. take it what you will. ins is the first thursday 2020 in which the stock market has declined. we have seen this tendency to pull back on fridays because
people are worried about what could emerge over the week end. it is thursday, the market fell. i don't know what it means for tomorrow. >> holiday weekend. >> holiday weekend. romaine: outperforming on a relative basis. 27% rally on the day. this is for the young people. they're introducing newhart seltzer. >> i am not that old. new hard seltzer. >> i am not that old. >> let's check in with the reporters who may not be familiar with her seltzer. at one ofto look those big momentum sectors that people continue to pile into with averages lower.
day, uprd high on the four days in a row, so despite the macro risks, investors continued to go into these tech names. this is a bearish divergence. were looking at a one year chart. you can see the faang index, some of the fed liquidity everybody is talking about driving this index higher 34% above that moving average. take a look at these lower highs on the rsi, showing you the faang index is making a new all-time high, increasingly less bullish momentum. something probably has to give. earningsswitch over to , the turnaround plan for kraft heinz. shares are falling after they reported a drop in fourth-quarter sales, following a string of courtly revenue declines, giving credit ratings
little reason to be patient. kraft heinz says it expects earnings to fall over this year. >> thanks. i'm going to look at the world of currencies. the dollar flat. haven assets, gold, and the yen higher. emerging markets taking its cue from that sentiment. koreall see weakness from , the currency under pressure, the rand, and latin america. the one exception is the mexican peso, higher on the day, still offering some carry even though it just cut its benchmark rate. romaine: thanks. still with us around the desk are our guests.
you look at where the market was , this is above the average .argets for most people when you look at that, do you have any sense that some of those targets need to move higher or that is premature? the thing that causes and overshoot is a robust level of public participation. >> we are 11 years into this bull market. when therarely a time public has been a consistent buyer. net redemptions from equity. see a greater to level of participation. you saw the largest inflows in the first week of february since
the first quarter of 2018. i mentioned the first quarter of 2018. those flows were not sustained. weres 2017 the flows sustained for the majority of the year. optionality,e like the hedge for the upside risks beyond what we talked about moments ago, which is divergence and momentum. highs could gow on a lot longer. resurgence ofa , thenn around coronavirus still see new highs. to what extent do technicals dictate the mood? again,up coming back up
so how much do technicals dictate the day-to-day movement? >> they are part of the day-to-day movements. they are essential for traders. once in the middle of january we were reaching extremes on rsi and 200 day moving average, had a pull back, bottomed at the 50 day moving average, then bounced off that, so the technicals are very relevant. price is always your guiding source in the technical world. as long as higher prices above keep moving averages, you are in pretty good technical king conditions. you look for those diversions is to pile up and look for exit points. the trend is your friend is a common statement that is very useful. as long as prices supported by moving averages and
fundamentals, we are in pretty good condition. let's talk about trend followers for a second. how have they been faring this year as opposed to last year, everyone following a trend, especially does investors not living their life. performance has been choppy. trend followers tend to do less in the equity markets and more away from the equity markets. if you look at the bond markets, they have been very choppy. is it time to be an active manager again? [laughter] >> great question, right? you look for things like correlation start to fall, diversions starts to widen, henducing a time during w
active management has a time do shine. we did see correlations rise, but they are falling again, but minimal. it is a tough time because there is still much crowding in the s&p 500. if we start to see a wider acceleration in economic growth, the demand follows through and equities, then we see a demand-driven market emerge, which hasn't existed through majority of the cycle, you see economic conditions improve and broaden around the world and you could see catch-up for lagging promoting active over passive management. the right now, risks driving everything, it is tougher asset managers to outperform unless they will take stronger and stronger bets. >> you are living life if you percentesla, up 4.8 today. is tesla emblematic of this
market? >> it is emblematic of what happens when you get momentum accumulating, but a week ago or so, you had what we see as a very rare occurrence, and inversion in this skew, whereby upside calls were more expensive on a volatility basis than downside puts, incredibly rare. , at is an absolute sign contrarian indicator. you had the selloff of well over 20%, but it shows you the market is in this indecision mode where it's trying to figure out whether to stay with the momentum and how far they can carry. ultimately, were looking at a reacceleration of economic activity if the reading in the ism manufacturing recently surprised above 50.
if we can see through the coronavirus and the economy starts to farm, that is where we have the rotation, where cyclicals will do better, where asset management actively will outperform. ifs there. of big thank you both. romaine: this was a good panel. roku,t: let's get to shares up 10% after fourth-quarter revenue that has beat the highest analyst estimates. , roku nets quarter revenue is about 3% above the consensus estimate. the good news continues for roku in the stock is moving higher. romaine: yelp down, reporting 2020ngs, saying it's asusted even on margin --
here is a snapshot of u.s. stocks. a fluctuating thursday. all three indices close slightly lower. ,>ncertainty returns more cases of the coronavirus, the death toll topping 1300. the future that goldman sachs could be shape by a longtime trader working her way up the ranks. investigation, harvard and yelp under scrutiny for failing to report hundreds of millions of dollars in foreign funding. ♪ coronavirus diagnoses increase by 15,000 overnight. 59 thousand people infected in 1300 deaths in china alone. here with more is sophie kamaruddin. even with these increased
numbers, they are large, surprising, discouraging to some extent. notu.s. is saying china is being completely transparent when it comes to the number of cases. doubtre has been ongoing about the veracity of chinese data. rawas yet to get access to numbers around the epidemic. we are getting deeper into the weeds when it comes to reported cases. we saw a jump in the total reported number of fresh cases. ,hen you look at the next level 15,000 was the total count for reported cases on thursday. up of peopleade reported under the new category including patients who are diagnosed with clinical symptoms. what this does imply is a larger a time when at
hospitals and staff are under stress in the hubei province. learned 125,000 testing kits have been supplied in china today. they are likely to have enough testing kits in the coming months, given they will have a situation exacerbated by these cases. has 88,000 flu-related deaths every year. this overlooks the ongoing pressure on the chinese leadership when it comes to minimizing the fallout in the shakeup in the province of hubei , and the keep meeting for the chinese national congress will be delayed, ritually scheduled for march 5. -- originally scheduled for march 5. >> thank you. for more on the coronavirus and
the economic impact, we are joined by the head of china in northeast asia for the racial practice. michael -- comess a a moment when it to china's response to the coronavirus? >> we have to be cautious comparing china to the former soviet union. i don't see this as a crisis for china's leadership yet. they have higher standards. socialing is implicit contract in china is you give me more power, i will take care of governance problems in china and overseas china's rise. this is a big hit to his ambitions. i don't see risk to stability or his grip on power, yet. it will be a challenge to upholding the standards he has set out. within china are
making some comparisons to chernobyl. obviously the hbo series is available for streaming. people who watch it in china are commenting on it, quoting from the tv show, leaving reviews the causal sensors to erase what they posted. eat away at the popularity of xi jinping? >> absolutely. we don't want to deny that. there is an outpouring on social media that are viewing it as something of a cover-up, and a direct criticism of the leadership. there is a difference between the criticism and thinking it may have the same effect in china as that episode had in the former soviet union. that is where the distinction is important. we shouldn't be too certain ,ithin china's political system decision-making and the types of and socialht circle
conditions, so i don't want to be overconfident. approaching that dynamic is a threat to xi jinping or his stability. romaine: some people have said this could work to the advantage of china in terms of dealing with the crisis, there are two things that are unthinkable in a free democratic society in the u.s. do you get to a stage where the rebound from the coronavirus in terms of the health rebound in the economic rebound, do you envision something happening quickly once this becomes clear that it is under control? >> china has an amazing ability to mobilize resources, building a new hospital in 10 days. that is an advantage in liability. there is a significant tug-of-war throughout the system on the containment effort versus starting to stabilize the economy. the messaging is still mixed
from the top. local officials were trying to ease economic recovery and restrictions and are still under some degree of paralysis. the markets until yesterday were quite optimistic we were going to see a quick rebound from this. there are reasons to think that will be more difficult until there is an unambiguous message from the top. scarlet: some people say if it was for the epidemic and quarantine that there would be more demonstrations now. i bring this up because of the outpouring of grief and anger over the death of the early whistleblower. it crystallizes that for the chinese government. >> i think that is possible. on the other hand, the kind of resentment after the death of the doctor is an outpouring across the country, but not that horizontal connection of people, for example, in one
location, or a labor movement that would create organized demonstrations that china's leadership most fears. i think it is an isolated but very shared sense of frustration with the leadership and how this the chineseffected governance laws it has revealed. romaine: thank you. to the earnings crossing the wire. , shares moving lower, the company reporting adjusted ,argin forecast, up 1% or 2% lighter than expected. q4 numbers, revenue and eps mist of the lowest end of estimates. expedia is moving higher, completely different story. the adjusted eps topped
$1.24, the estimate was $1.14, and they give a 2020 forecast for adjusted ebitda growth of double digits. 8%rlet: roku is up almost after hours. it's forecast is above the average estimate. fourth-quarter sales also topped the estimate. this is an ott streaming platform continuing to deliver for investors. mattel, the toymaker had fallen initially after its fourth-quarter results missed estimates but has turned it around a little bit and is now moving up, even after fourth-quarter sales this is analyst estimates. top the average estimate. from new york, this is bloomberg. ♪
scarlet: senior roles i goldman sachs are largely men, but there is one woman who they rely on. she is charting her way up the ranks. for more on how women are rising on wall street, we are joined by our guests. tell us more about her. even on wall street, it is an industry dominated by men. even with that context and that , this all goes back a couple of weeks when they had their investor day. men after men on the senior leaders, explain why shareholder
should believe in the turnaround strategy. all of them were men. there is one woman who will play a key role in goldman sachs achieving that strategy, which is why we look into her. she has been with goldman sachs since 1993. she is now the global treasurer and has an important role in ensuring goldman sachs is able to meet profitability targets they have set for the first time ever. she had a lot of challenging roles. there are some interesting places she could go, including leading trading, cfo. what are the challenges she has ahead? have beenf insiders ensuring she plays a big part in achieving the new profitability target. it is some sign she is ready to catapult a higher office. there are senior options
available, cfo is one, leading the trading division. goldman sachs pledged to diversify their ranks, but it is harder than it seems. when you think about the senior women who could fit into these roles, that number is not huge. it is a small number of women, and she features in every conversation. romaine: she was elevated to treasurer a couple of years ago. there was some concerned you taking somebody away from a more viable position on the trading desk, moving her to treasurer. how is she received within the company? >> comments we've had from the firm come of people outside have said she seems to be a because sheigure, is unlike the typical goldman sachs hi flyer. you don't have the usual swagger. she can certainly climb through goldman sachs. romaine: i'm sure we will be following her career and
♪ with firstk crumpton word news. william barr says president trump's tweets and public comments about the justice artman and ongoing cases make his job "impossible." he spoke to abc news in his first public comments since his department reversed course on a sentencing recommendation for roger stone. careere comes as four prosecutors quit the case, but aren't william barr praise from president trump, feeling criticism that the justice department has become focused on protecting the president's political allies than maintaining independence. the president lashed out against
john kelly for being disloyal after he came to the defense of a former national security a, lieutenant col. alexander vindman, who offered key testimony in the impeachment inquiry. forced from his job on the white house national security council last friday, just days after the senate acquitted the president of two articles of impeachment. benjamin will be reassigned by the pentagon. the senate approved a bipartisan measure aimed at limiting president trump's authority to launch military operations against iran, with a republicans joining democrats in a post-impeachment bid to constrain the white house. the measure was offered by democrat tim kaine. >> this is not directed towards president trump. it would apply equally to any president. it is fundamentally about congress owning up to and taking responsibility for the most significant decisions we should ever have to make.
>> i can't imagine why we are doing this now. it makes conflict more likely, not less. if this passes, the president will never abide by it, no president would. and it willetoed, have no effect on his ability to conduct military operations. >> the president is expected to veto the resolution from a warning that if "his hands were tied, iran would have a field day. in the u.k. -- field day." the chancellor this exchequer has resigned. i was unable to accept the conditions, so i felt i was left with no option other than to resign. my successor has my full
support, and the prime minister continues to enjoy my full support. >> bloomberg has learned that prime minister johnson demanded he fire all five of his senior treasury aids. romaine: nvidia is out with its numbers. adjusted epsr $1.89. they said they would be some impact from the coronavirus. they cut their fiscal 2021 first revenue by $100 million
to account for the potential impact of the coronavirus, so a mild cut. most analysts were expecting a rebound in sales growth, and they got it. scarlet: it is boosting shares of amd and micron as well. amd has already had quite the run. so that run of 1.3% is not surprising. saw u.s. stocks attempt to mount a comeback. they ended the day on a down note. plan toanation is the shrink operations. joining us with the big picture view is our guest. great to see you. thank you for speaking with us. we know the fed is a tailwind for the market, that liquidity-driven market is the
theme we have been talking about all year, but when you hear the words fed and shrink, that can only mean bad news. does that make people rethink the fed's commitment to supporting the market? >> it shouldn't. the big purchases was in response to dislocations in the the treasury is reducing supply. a lot of things were happening. they were saying it is a matter of when, not if. .e have seen that the market is wrong to interpret it that way. powell was very clear this week when he was testifying that they -- waiting for broadly before it improves. , we werence companies
cuping about a tiger getting into aig and metlife. is the fed can hurt these guys? >> no. , what isstep back priced into the market is one more fed cup this year. we believe it will stay flat. we have seen low interest rates. that does her business models like insurance companies. andhave these products, your expecting treasuries plus corporate spreads to give you a relative return, and that has been a multiyear headwind. if you look at the multiples in the insurance sector, i think the market has gotten overemotional. in addition to interest rate risks, there are corporate credit events. these models tend to buy credit. do we see at the fault cycle,
problems on the credit horizon that would impact that sector? no. of twoombination emotional over rates from investors and a benign stable default cycle over the next 18 months. , it is goodsector valuation for entry. romaine: let's talk about rates. there was talk about the inflation trade. people need to prepare themselves for the possibility of a rebound in inflation, which could arouse the fed from its lumber. do you buy into the idea we will see that reflation trade this year?> >> that is a great question. not really. cpi came out a little strong, but there are so many things in the pipeline when you think about commodities, idiosyncratic boeing get their 737 max on the market to lower transportation costs.
there are some things behind the scene that contain inflation. within reason, we would love to see more inflation with this economy we have, so survey the fed indicates there are still more worries about deflation from the coronavirus, the uncertainty as far as it is too early to tell him about what is the insidious impact on psychology, travel, and the pipelines of distribution. that will leave them standing to the side. thelet: how many of assumptions we had the end of 2019 for 2020 still hold, the idea of the rest of the world is a better opportunity for investors than the u.s. because of the run up the u.s. has had. does that still hold? >> it does in pockets. in china before the virus, we were quite bullish on global reflation, meaning when you look
at china, they had done a lot of stimulus and things were looking good, and actually in emerging markets, another way to think about reflation is that it looks like a good trade. we still believe that is the case it will be a fee-shaped it will for china, that bear fruit ultimately. but also you're seeing in emerging-market. even mexico cut short rates today. there is still this ability to reflate these emerging-market economies. do i think that whole thesis has gone off the rails? no, but you have to watch the situation in china carefully. romaine: one thing people are watching his corporate credit. everybody is trying to determine whether there is trouble underneath the surface. what do you think? >> we do not see trouble under the surface. there is a lot of emotion around it. it is leverage high?
yes, but not getting worse. b credit-- triple aren't leveraging up anymore, so earnings growth out of the companies in the s&p, the fact they aren't continuing to make credit conditions worse, we don't see a big, scary event on the horizon, so we would recommend investment-grade value for people who need a little bit of yield, as well as the bank loan market. bank loans are cheap to high-yield and don't nearly have the sectors or markets, so if you need to go below, i would point investors in that direction. romaine: great. i want to bring you some breaking news. .his on huawei a lot of folks were concerned , that license being extended for 45 days, the
♪ kenya, one of the biggest apps makes small loans available to people in kenya, even those without bank accounts. it generates an instant credit score. it is on a mission to help the 2.5 billion people around the world. some say the terms can be odious. joining us now is our bloomberg investigative reporter. this is a great story. i want you to talk about the terms that these people who take the lands end up with, the benefit, the risk.
>> it sounds almost like a charity. they're offering small loans to entrepreneurs in developing countries, empowering women. someone might borrow $10 to open a vegetable stand, bite tomatoes, sell them, repay the loan in lift themselves out of poverty. what they don't talk about so much is the loans are expensive. the interest rates are 180% annualized, some more like what you see on a payday loan in the united states. there is a lot of apps like this. anyone you ask has tried them out. often it is the first time they have borrowed from a formal financial firm. loans, digital lending, this was supposed to be the next big thing across the world. how much of this is a problem? because is a leader
more than a decade ago, the local phone, he started an app, which is like venmo here, and now everyone rich and poor is using digital payments to buy everything from a sandwich on the street, getting their salaries, paying their rent, so these apps have started offering digital loans built on top of that system. ofy are a few years ahead almost any country in the world. backfiring, canyons are getting provided with offers for debt. the countryults in has defaulted on the digital loan. due to the backwards credit reporting system, if you have defaulted on one loan, you could be totally blacklisted from the financial system. thank you so much.
good story. , let'sfilings rollout look into that influence shareholders are having on corporate america. .oining us now is jim rothman thank you for joining us. scouring these 13 apps constantly, but the big question is do hedge funds matter? we are watching where they are going, but do we care where they are placing the bets anymore? >> hedge funds make a big difference. every quarter is tracked 65 hedge funds, the leading, event-driven hedge funds and look at their ownership across 900 companies to see which positions they are increasing, decreasing, exiting, taking new positions. i view it as the bellwether for where market sentiment is leading. these are funds that are highly concentrated, do a ton of
research, and we watch the moves closely. meaning everyone, people who aren't hedge funds, pay attention to these filings, because it gave you a sense of the market. the last few quarters in the last few years, it is still the same cluster of stocks, the same cluster of industries. is it a snooze? what does that tell you about the state of where the hedge fund industry is? is a realhave seen concentration in large cap consumer, health-care, technology, and industrial names. that is part of what has contributed to it. there was also more mystery before around who these leading hedge funds were investing in, of the 13 apps were a much bigger reveal. activism is less seasonal. it is more of a year-round sport. when it was more of a mystery,
maybe there were 20 or 25 hedge funds really mattered. last year, there were 143 hedge funds who engaged in shareholder activism, and the shift in strategy to event-driven is more significant, but more of a year-round thing. scarlet: i get what you're saying about using research to get a read on trends in the market. what do the findings tell you versus the flows you can track on a daily basis? how do you use that? >> the filings really help me. we are watching carefully the rising level of passive investment in the market. the findings give us a ton of data that the overall ownership of u.s. equities, and each quarter we monitor what percentage of the overall market is passive owned. it also helps us to detect how concentrated the market is, which is a point you were making. right now, the tlarock, vanguar,
state street, a 19 .9% of the s&p 500. we are expecti that to go over 20% this quarter. we have been watching this for six years. our view is this trend is continuing. the top 10 shareholders of the typical s&p 500 but he own 47%. every quarter it has increased for the last five years. that level of ownership concentration is also relevant. that is a big point of interest for our research. >> you mention a number of whales you are watching. who are some of them in what insights can you glean that are influential about this whales? >> we watch the topped event-driven activist funds, a of 10 aristocrats, third point, back,t, star board, value names like that. we also watch the deep value
funds, who are very high , the real, harris high conviction. the reason why those whales are important because those of the funds that run the highly concentrated positions, and they are the ones who eventually take >> you mentioned deep value is one thing we look at, but is value dead in this market? >> value is not dead. deep value i associate with high conviction stock pickers. as the market grows more passive, more quant-oriented, what the deep value stock pickers are doing become more important. ande are the price setters those identifying conviction ideas for activist. scarlet: and eventually the passive money will follow. >> that's right. romaine: thank you. this is bloomberg. ♪
♪ yale are under scrutiny for failing to report gifts and contributions from foreign countries including china and saudi arabia. joining us now is our guest. this doesn't come from foreign governments, but through foundations, through alumni, through companies? >> it could be a combination of everything. the story looked at this data. we found almost $1 billion came from china to u.s. universities, and harvard was on top because they are always on top in terms of fundraising. romaine: usc, penn state, stanford. is idea is there
underreporting or something more nefarious? education department said it has come to their attention that there has been a lot of underreporting. there is concern about that because of espionage. that withminded about the arrest of a harvard chemistry professor. there is a lot of concern about that. several other schools have gotten letters come in, cornell -- letters, m.i.t., cornell. they are designed to promote language and culture, and there has been a senate subcommittee report a couple of years ago that expressed a lot of concerns and talked about this underreporting. >> why is this becoming an issue now and why is the education department focusing on harvard and yale? >> they are big names. who is on top?
harvard, almost 10% of that total. this is not the only thing harvard and yale are coming under scrutiny for. the new also paying endowment tax. scarlet: there is this history of tension under the trump administration between the department of education and these big schools. one school didn't file any reports for three years. did yale explain why? >> we have a story that should be out now that says yale looked at the records, and it was correct they did not file those. they addressed as last year and now believe they are in compliance. romaine: just to dig a little bit deeper, there is a political element. some of the companies you mentioned in your story were zte, kaspersky labs.
does this go away or become more tangible in sustaining and we will see universities under scrutiny pneumatic who is in the white house? >> now that the idea has been brought up and you dig a little bit, there is stuff that is interesting. i'm not sure that will go away because there are strong ties in the department of education requires this disclosure for about 30 years, and they say the colleges were doing what they were supposed to do by law and they have asked for more information. the universities are not happy because they say we don't want to expose donor names, expose secrets, so if a particular company is looking to do research, their competitor may not want their competitor to know what they're doing research about, so the colleges are not happy about that. scarlet: a lot of this money comes in as grants for research, something that universities want
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thousands of mattresses to those in need. experience the leesa hybrid mattress. right now, it's on sale. order today. go to leesa.com. >> welcome to bloomberg markets. i am taylor riggs with paul allen in sydney. coming up in the next hour, criticizing china. the white house says it is disappointed at beijing's virus response, echoing ongoing doubts about the accuracy of its data. we will have the latest. say theaba executives coronavirus is negatively impacting revenue. we will see how the giant's latest earnings give a window into the health of t